FINDING 2023-003
Information on the federal program:
Subject: Education Stabilization Fund – Advance Draws
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Pass-Through Entity: Indiana Department of Educatio...
FINDING 2023-003
Information on the federal program:
Subject: Education Stabilization Fund – Advance Draws
Federal Agency: Department of Education
Federal Program: COVID-19 – Education Stabilization Fund
Assistance Listing Number: 84.425D, 84.425U
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles
Audit Finding: Material Weakness, Qualified Opinion
Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements.
Context: During testing disbursements charged to ESF grants, we noted advance payments were received during the audit period prior to allowable costs being incurred by the School Corporation impacting the following Education Stabilization Fund grant awards:
● The School Corporation submitted a claim for reimbursement for $43,864 from the ESSER I grant award (84.425D) which was receipted on August 24, 2021. As of August 24, 2021, the School Corporation had incurred $41,674 of grant expenditures. The remaining $2,190 was disbursed on April 12, 2022.
● The School Corporation submitted a claim for reimbursement for $148,822 from the ESSER II grant award (84.425D) which was receipted on July 28, 2021. There were no expenditures incurred as of the date of the reimbursement request. The School Corporation began incurring expenditures after the advance payment, however, as of June 30, 2022, the School Corporation had an unspent cash balance of $24,613 in the ESSER II fund because of the advance payment. The School Corporation did not request any reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an unspent cash balance of $16,145. FINDING 2023-003 (Continued)
● The School Corporation submitted two claims for reimbursements from the ESSER III grant award (84.425U) during fiscal year 2022. The first claim reimbursement was receipted on November 24, 2021, in the amount of $52,210. The second claim reimbursement request was receipted on June 22, 2022, in the amount of $144,649. The School Corporation had incurred expenditures as of the date of each claim reimbursement requests, however, the amount claimed for reimbursement exceeded expenditures incurred resulting in advance payments being received. As of June 30, 2022, the School Corporation had an unspent cash balance of $88,348 in the ESSER III fund as a result of the advance payment. The School Corporation did not request any claims for reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an unspent cash balance of $21,842 in the ESSER III fund because of the advance payments.
Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. Going forward the reimbursement will be prepared by the Assistant Superintendent once the funds have been spent and the Corporation Treasurer will review the reimbursement before it is submitted.
Responsible Party and Timeline for Completion: The Assistant Superintendent, David Hobaugh, and the Corporation Treasurer, Kristina James, will oversee the corrective action plan and will be implemented immediately.